“This moment in history, when the political, economic, and strategic relations in the post-COVID world are changing, is the dawn of a new era – one in which India is well-poised to truly be the land of promise and hope”. This opening remark by the Finance Minister (FM) clearly set the tone for the Budget of new India, presented on 1st of February.
To set the context, there were growth concerns given the impact of pandemic during which the economy had contracted. There were signs of weak private consumption and measured government spending coupled with a slowdown in private investment. Further, there was a limited fiscal space with lower tax collections and increased health and social expenditure. The expectations thus were for a growth-oriented budget with higher spending and focus on infrastructure. The FM finally seems to have ticked all the boxed in this Budget.
The Budget for FY 2021-22 had a bold, clear and decisive agenda and focused on boosting economic growth. It was simple and yet busted many things, right from being the first digital budget. It broke the shackles of fiscal prudence which was the undertone of many previous budgets. The fiscal deficit targets are left to fall as required. Next, there was no tinkering with taxed and no hidden additional taxes. Things were a lot transparent and the tax collections and other divestment targets were more realistic and achievable. Overall, the budget came as a positive surprise and a much-needed relief which has already boosted sentiments and has the promise of unleashing a growth wave. Here is an overview of the entire budget.


  • Sharp increase in Healthcare allocation to ~ ₹2.24 lakh crores, up 137%
  • PM AtmaNirbhar Swasth Bharat Yojana (₹64,180 crores over 6 years) to strengthen health systems
  • Supplementary Nutrition Programme and Poshan Abhiyan to be merged and launched as Mission Poshan 2.0
  • Jal Jeevan Mission (Urban) for universal water supply in all Urban Local Bodies
  • Urban Swachh Bharat Mission 2.0 with an outlay of ~ ₹1.42 lakh crores over 5 years
  • ₹35,000 crores for Covid-19 vaccine
  • Voluntary Vehicle Scrapping policy announced


  • AtmaNirbhar Bharat – Production Linked Incentive scheme (PLI) for 13 sectors to strengthen the manufacturing industry, ₹1.97 lakh crores committed over 5 years.
  • MITRA (Mega Investment Textiles Parks) Scheme to create world-class infrastructure, 7 such parks over 3 years
  • The National Infrastructure Pipeline (NIP) now covers 7,400 projects
  • Bill to set up a DFI (Development Financial Institution) – to act as a provider, enabler and catalyst for infrastructure financing. Ambition to have a lending portfolio of at least ₹5 lakh crores in 3 years
  • Debt Financing of InVITs and REITs by Foreign Portfolio Investors will be enabled
  • National Monetization Pipeline of potential brownfield infrastructure assets will be launched. The assets to be monetized will cover road projects, power transmission, Dedicated Freight Corridors (DFC) by railways, airports, oil & gas pipelines, warehousing assets, sports stadiums, etc.
  • Asset Reconstruction Company Ltd. and Asset Management Company to resolve stressed asset’s problem of Public Sector Banks
  • Increase in FDI limit in Insurance Sector from 49% to 74%
  • Rationalized single Securities Markets Code by 2022
  • Development of a world-class Fin-Tech hub at the GIFT-IFSC.
  • Permanent institutional framework for Corporate Bond market
  • SEBI as the regulator for the development of Commodity Market ecosystem
  • ₹20,000 crores for the recapitalization of Public Sector Banks
  • Investor charter as a right of all financial investors across all financial products.
  • Take up decriminalization of the Limited Liability Partnership (LLP) Act, 2008.
  • A revised definition of Small Companies from ₹50 Lakhs to ₹2 crores of paid-up capital and turnover from ₹2 crores to ₹20 Crore. To benefit over two lakh companies.
  • Incentivize One Person Companies (OPCs) by allowing them to grow without any restrictions on paid-up capital and turnover and change form at any time. Reduce the residency limit for residents from 182 to 120 days and allow NRIs to incorporate OPCs.
  • Privatization of 2 Public Sector Banks and 1 General Insurance Co.
  • IPO of LIC in FY22
  • A sharp increase in capital expenditure at ₹5.54 lakh crores, up 34.5%. Additional ₹2 lakh crores to States and Autonomous Bodies for their Capital Expenditure.
  • Over 13,000 km roads, at ₹3.3 lakh crores, already awarded under the ₹5.35 lakh crores Bharatmala Pariyojana project. By March 2022, another 8,500 km to be awarded and complete an additional 11,000 km of national highway corridors.
  • To further augment road infrastructure, more economic corridors are also being planned
  • Higher outlay of ₹1.18 lakh crores for Ministry of Road Transport and Highways (₹1.08 lakh crores for capital)
  • A higher outlay of ₹1.10 lakh crores for Railways (₹1.07 lakh crores for capital)
  • National Rail Plan for India – 2030 to create a ‘future-ready’ Railway system by 2030.
  • Western DFC and Eastern DFC to be commissioned by June 2022.
  • 100% electrification of Broad-Gauge routes by December 2023.
  • Public bus transport services to be augmented with PPP models, target 20,000 buses
  • MetroLite and MetroNeo technologies to provide metro rail systems at a lesser cost to smaller cities /towns
  • A revamped reforms-based result-linked power distribution sector scheme to be launched with ₹3.06 lakh crores over 5 years.
  • Ujjwala Scheme which has benefited 8 crores households, extended to cover 1 crore more beneficiaries.
  • Add 100 more districts in the next 3 years to the City Gas Distribution network.


  • Agricultural credit target increased to ₹16.5 lakh crores, up 10%
  • Increase in allocation to Rural Infrastructure Development Fund
  • Development of modern fishing harbours and fish landing centres
  • 1,000 more mandis will be integrated with e-NAM.
  • One Nation One Ration Card scheme to help migrant workers.
  • Social security benefits will be extended to gig and platform workers.
  • Women will be allowed to work in all categories and also in the night-shifts.
  • Allocation of ₹15,700 crores for MSME Sector


  • 15,000 + schools to be qualitatively strengthened
  • 100 new Sainik schools.
  • To introduce legislation to set up the Higher Education Commission of India.
  • 750 Eklavya schools in tribal areas
  • Revamped Post Matric Scholarship Scheme for the welfare of scheduled castes.
  • Realigning National Apprenticeship Training scheme for graduates and diploma holders in Engineering
  • Partnership with the UAE and Japan in the area of skill development and recognition
  • Central University in Leh for accessible higher education



  • National Research Foundation with an outlay of ₹50,000 crores over 5 years
  • Financial incentive to promote digital modes of payment
  • National Language Translation Mission to boost internet access
  • An outlay of ₹4,000 crores spread over 5 years for Deep Ocean Mission for ocean exploration and biodiversity conservation


  • Introduction of National Commission for Allied Healthcare Professionals Bill
  • Setting up a Conciliation Mechanism for quick resolution of contractual disputes
  • ₹3,768 crores allocated for the first digital census


  • No change in the individual and corporate tax rates /structure
  • Exemption from filing income tax returns for senior citizens (75 years and above) having only pension and interest income. Banks to deduct tax on such senior citizens having a pension and interest income from the bank.
  • Tax exemption for the interest income earned on the employees’ contribution to various provident funds restricted to the annual contribution of ₹2.5 lakhs.
  • The maturity amount from unit-linked insurance plans (ULIPs) with an annual premium above ₹2.5 lakh will now be subject to capital gains tax
  • The limit for tax audits increased from ₹5 crores to ₹10 crores (only where 95% of payments are digitized), providing relief to many corporate houses.
  • Advance tax to be only dividend income declared.
  • Additional deduction of ₹1.5 lakh for loans for the purchase of affordable house extended to next year.
  • Dividend payment to REIT/InvIT exempted from TDS
  • Time limit for reopening of an income tax assessment to be reduced to 3 years from 6 years
  • The tax holiday for startups extended by one more year
  • The stamp duty value of residential unit can be up to 120% (earlier 110%) of consideration if sale made by 30th June 2021.
  • Employee’s PF contribution deducted but not deposited by the employer, it will not be allowed as a deduction for the employer.
  • Pre-filling of returns with details of salary, tax payments, TDS, capital gains, dividend and interest income, etc.
  • Proposal to notify rules for removing hardship for double taxation for NRIs.
  • Constitution of a Dispute Resolution Committee for small taxpayers with taxable income up to ₹50 lakhs and disputed income up to ₹10 lakhs
  • Income Tax Appellate Tribunal to be made faceless


The government has focused on growth while letting the fiscal deficit slip to 6.8%. Gross market borrowing for the next year is expected at ₹12 lakh crores. The pro-growth budget has a huge focus on health care, infrastructure, agriculture, education, disinvestment, simplification of tax laws, financial sector and restructuring of indirect taxes while there is a lower planned subsidy. The government also has focussed on improving the quality of life, by focussing on food, availability of drinking water, reducing pollution and promoting affordable housing.
The budget builds on the government’s focus on infrastructure and manufacturing led economic revival under the AtmaNirbhar Bharat. The quality of spending in this budget is much better with increased allocation for capital expenditure. No new taxes have also come as a big respite to the markets. The government is betting that the domestic demand will recover and further boost economic activities. There is also transparency and credibility in terms of assumptions. Overall, a budget is just what was needed at this time. The platform is now set for unleashing the animal spirits of the economy.